Core Contracts

Unconstrained Fund Allocations Leading to Insolvency Risk

Description:

The allocateFunds function allows an allocator to assign any amount to a recipient without checking the treasury’s actual balance (_balances) or total value (_totalValue). There’s no enforcement to ensure that the sum of allocations doesn’t exceed available funds.

Affected Code:

Impact:

• An allocator could allocate 1,000 tokens when the treasury only holds 500, creating an expectation of funds that cannot be fulfilled.

• If managers withdraw funds without regard to allocations, the treasury could become insolvent, unable to honor allocated amounts.

Example Scenario:

• Treasury has 1,000 tokens.

• Allocator A allocates 800 tokens to Recipient X.

• Manager withdraws 600 tokens (allowed since _balances[token] >= 600).

• Only 400 tokens remain, but 800 are allocated—insolvency occurs.

Recommendation:

• Track the total allocated amount per token and enforce a limit. Add a new mapping:

  mapping(address => uint256) private _totalAllocated; // Token => total allocated amount

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• Update allocateFunds to check:

  uint256 newAllocation = _allocations[msg.sender][recipient] + amount;

  if (_totalAllocated[token] + newAllocation > _balances[token]) revert InsufficientFunds();

  _totalAllocated[token] += newAllocation;

  _allocations[msg.sender][recipient] = amount;

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• Adjust _totalAllocated in withdraw to prevent over-withdrawal.